Ka Shui International Holdings Limited announced that based on a preliminary review of the unaudited consolidated management accounts of the company and its subsidiaries, it is expected that the Group will incur a loss of not more than HKD 12 million for the six months ended June 30, 2014 as compared with a profit recorded by the Group for the corresponding period in 2013. Such decline was mainly due to the following reasons: (i) A decline in the Group's overall turnover for the six months ended June 30, 2014; (ii) As a result of the decrease in the Group's overall turnover and surge in subcontracting charges, gross profit margin of the Group for the six months ended June 30, 2014 also dropped. Since part of production facilities were damaged due to the occurrence of a fire accident in one of the Group's production bases in Shenzhen, the PRC on November 27, 2013, the Group has subcontracted part of the affected production processes to its partners in the supply chain and hence the subcontracting charges for the six months ended 30 June 2014 had increased; and (iii) the Group is still in the process of pursuing the insurance compensation from the relevant insurance company and as such, no amount of the insurance compensation has yet been recognized in the Group's interim results for the six months ended June 30, 2014.